TMI Blog1998 (2) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... e development, manufacture, sale and distribution of various consumer products in India. Lakme Ltd. (in short, "Lakme") and Hindusthan Lever Ltd. (in short, "HLL") signed a memorandum of understanding to start jointly a company called Lakme Lever Ltd., (in short, "the company") to take over the sales and marketing unit of Lakme. The 31st December, 1995 was fixed as the date of taking over at the close of that day's business hours. An Extraordinary General Meeting of the shareholders of Lakme and HLL was held on January 5, 1996 wherein permission was accorded to the Board of Directors' of Lakme to transfer by sale Lakme's sales and marketing unit relating to the cosmetic division as a going concern to the company. 3.. By an assignment made on the 29th March, 1996, Lakme agreed to sell and the company agreed to take over as a going concern Lakme's existing sales and marketing units throughout India together with the net movable tangible assets and net current assets as on December 31, 1995 for a consideration and on the terms and conditions set out therein with effect from the first day of January, 1996 or such other date which may be mutually agreed upon. Pending finalisation of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om January 1, 1996, were made by Lakme as trustee on behalf of the company. The respondent No. 3 rejected the prayer made by Lakme Lever Ltd., and also rejected the prayer to treat Lakme Lever Ltd., as transferee. Respondent No. 2, the Deputy Commissioner, Commercial Taxes, Corporate Division before whom an application for revision was moved confirmed, by an order dated October 9, 1996, the order of the respondent No. 3. The applicants in these two cases have come before this Tribunal with the prayer that the orders of the Assistant Commissioner dated July 25, 1996 and the Deputy Commissioner, dated October 9, 1996 should be quashed and also praying that the respondent No. 3 should be directed to amend the certificate of registration of Lakme in favour of Lakme Lever Ltd., or to direct respondent No. 2 to grant new registration certificate to Lakme Lever Ltd., giving effect thereof from 1st January, 1996. The applicants have also prayed for an order directing the respondent No. 3 to give validity of the certificate of registration No. PS/2006 issued in favour of Lakme Lever Ltd., dated August 6, 1996 with effect from January 1, 1996 instead of July 31, 1996 as already given. In R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he June 7, 1996. Under the circumstances of the case, section 99 has no application at all. It is further submitted that merely due to the reason that Lakme Lever Ltd., will be confronted with very serious problems regarding the amount of tax deposited in the name of Lakme Ltd., quoting its registration certificate number during the period from January 1, 1996 to July 6, 1996, the certificate of registration of Lakme Ltd., cannot be amended by incorporating Lakme Lever Ltd.'s name as transferee by overlooking the requirements of law contained in section 99 of the 1994 Act. Further admittedly Lakme Ltd., carried on business of the sales and marketing unit even after purchase by Lakme Lever Ltd., till July 6, 1996, as a trustee for Lakme Lever Ltd., and, therefore, Lakme Lever Ltd., will not face any problem in spite of the amount of taxes deposited by Lakme Ltd. Assessment of taxes under the 1994 Act shall have to be made in the name of Lakme Ltd., for the period commencing from January 1, 1996 and ending on July 6, 1996 because Lakme Ltd., itself carried on the business as the trustee. When Lakme Ltd., was carrying on business of Lakme Lever Ltd. as a trustee of Lakme Lever Ltd., L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be amended with effect from January 1, 1996 in favour of Lakme Lever Ltd. In this connection, he referred to the decision of the Bombay High Court in the case of Commissioner of Income-tax v. Swastik Rubber Products Ltd. [1983] 140 ITR 304. In that case there was a scheme of amalgamation of a bank with the assessee-company. Under clauses (1), (2) and (3) of the scheme, the entire undertaking of the bank would be transferred to the assessee with effect from July 1, 1971. On petitions made to the High Court under sections 391 and 394 of the Companies Act, 1956, the High Court passed orders that with effect from July 1, 1971, the whole of the business and property and liability of the bank was transferred to the assessee without any further act or deed. However, according to clause 15 of the scheme of amalgamation, it was provided that although the scheme of amalgamation was to be operative from July 1, 1971 it was to take effect finally from the date on which any of the sanctions from the Comptroller of Capital Issues was last obtained. In that case the High Court held that as per clause 3 of the scheme with effect from July 1, 1971, the transferor was deemed to have been car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated July 25, 1996, the application of the two companies was disposed of on the ground that it was not a total transfer but even if it is held by the Tribunal that the transfer was an absolute one even then, according to section 99 they were not entitled to the amendment of registration certificate because the transferee did not carry on the business in their own name or any other name. It is an admitted fact that during the period January 1, 1996 to June 6, 1996 it was the transferor who acted as an agent and under the West Bengal Sales Tax Act, 1994, an agent is a dealer. Mr. Saha referred in this connection to the judgments in the case of Bibhas Chandra Gon v. State of West Bengal [1964] 15 STC 277 (Cal) and Shethia Mining and Manufacturing Corporation Ltd. v. Commercial Tax Officer [1977] 39 STC 246 (Cal). In these two cases, Mr. Saha submitted, the scope and nature of section 17 of the Bengal Finance (Sales Tax) Act, 1941 have been examined. He pointed out that section 17 of the 1941 Act is the same as section 99 of the 1994 Act. As would be seen from these judgments, section 99, Mr. Saha submitted, categorically requires that there shall be not only absolute transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the lessee shall, on application to the Commissioner, be entitled to have the certificate of registration amended accordingly." It would be seen that what is under examination in section 99 of the 1994 Act is the transfer of ownership of the business of a registered dealer and not the transfer of ownership of a particular company. In the instant case the application for amendment is an application for amending the registration certificate of a particular dealer. The entire activity of that registered dealer is confined to the sales and marketing business of Lakme Ltd. and the registered dealer in West Bengal does not have any connection with the manufacturing or other activities of Lakme Ltd. What was transferred by the agreement executed on the March 29, 1996 was Lakme's existing sales and marketing unit. The branch in West Bengal which is the registered dealer in West Bengal is exclusively a selling unit. And therefore, there is no reason why the transfer of the ownership of the business of the registered dealer in West Bengal could be considered to be a partial transfer of ownership. In the agreement only the selling activities of Lakme are transferred to M/s. Lakme Leve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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